It sounds like an oxymoron: making a profit from nonprofits. Executive Systems Inc. sees it as eminently sensible.
The Bethesda-based company specializes in the computer software and services that nonprofit groups -- more than a few of which call Washington home -- use to raise money.
With its recent acquisition of Aztech Corp., a competitor that also is headquartered in Bethesda, Executive Systems is now the largest computer services firm focusing on nonprofits, and it's looking for more acquisitions, chief executive John Puhala said.
Its clients include the World Wildlife Fund, the Kennedy Center, the National Council on the Aging and the National Newspaper Association, he said.
Puhala said the privately held company's annual revenue is in the $5 million range, but he declines to reveal its earnings, other than to say Executive Systems is profitable.
The staff has grown to about 50 people since the Aztech merger, whose terms and method of financing Puhala also declines to disclose.
"We're a national company with customers all over, but our concentration is in the Washington area, because many of the organizations have lobbying activities," Puhala said.
Nonprofit groups in New York and Chicago also are clients.
The market for the services of Executive Systems and Aztech, both founded in 1970, has grown dramatically. "There are approximately 2,200 active staffed and budgeted associations in the Washington area," said Tom Gorski of the American Society of Association Executives. "And only a handful of those are for-profit."
Executive Systems and its 50 employees work in a narrow specialty of the multibillion-dollar computer services industry, Puhala said.
The company has about a half dozen smaller competitors in the Washington area, he said.
But while smaller firms such as Executive Systems are capitalizing on their market, it doesn't mean that big computer firms can't do the same.
"It's just that they don't specialize and thus can't do for their customers what we can," Puhala said.
The company's specialties include maintaining and updating nonprofit groups' membership rosters and handling direct-mail fund-raising campaigns.
"For some clients we handle only part of the process," Puhala said. "For others we can handle everything."
The term for this growing trend toward hiring computer service companies to perform tasks that companies had handled themselves is "outsourcing."
Among the more notable recent examples of the trend is Eastman Kodak Co., which less than a year ago decided that International Business Machines Corp. could handle its data-processing better and cheaper.
"A lot of our members are getting active in outsourcing," said William Warner of the Computer Software and Services Industry Association. "It's a growth market for sure."
A recent Yankee Group report estimated the outsourcing market at $25.6 billion last year.
Executive Systems hopes to tap a piece of that by making more acquisitions, expanding its client list and adding services, Puhala said.
"Within the total picture of computers we represent a very small but vital service for our clients," he said. "We are providing a service that is critical to their mission."